The overall goal of this proposal is to define the mechanisms that underlie the formation of endocrine cells in the pancreas and to apply this knowledge to instruct human embryonic stem cells (hESCs) to produce functional insulin-secreting beta cells. During the past funding period, work under this grant has determined that ductal progenitors in the pancreas are the major source of endocrine cells during embryonic development. Mechanistic studies in the PI's laboratory have further shown that the transcription factor Sox9 is necessary to bestow competence upon ductal progenitors to initiate endocrine gene expression programs. Moreover, we have demonstrated that Sox9 expression is under control of the Fgf and Notch signaling pathways, suggesting that progenitors need to be exposed to Fgf and Notch signals for endocrine cell differentiation to be initiated. In preliminary studies presented to support a continuation of these studies, we show that Fgf and Notch signaling are aberrantly regulated in current differentiation protocols of hESCs towards pancreatic endocrine beta cells. We hypothesize that the aberrant Fgf and Notch signaling environment accounts for the malfunction of beta- like cells produced in vitro. In this continuing renewal application, the PI proposes a combination of mouse genetic and hESC-based approaches to (a.) further define the mechanisms by which Fgf and Notch signaling orchestrate endocrine cell development and (b.) apply this knowledge to generate functional endocrine cells from hESCs in vitro. To better understand the specific signaling environment necessary for endocrine cell differentiation, Aim 1 will investigate how the Fgf and Notch signaling pathways coordinately control the specification and differentiation of endocrine cells. To aid these experiments, the PI's laboratory has developed unique genetic mouse models. In Aim 2, we will employ a novel live imaging technology established in the PI's laboratory to monitor the initiation of endocrine cell differentiation at single cell resolution in real time. Based on evidence in othe tissues and organs, experiments under this aim will explore a possible connection between cell division, Notch activity, and the initiation of cell differentiation. In Aim 3, we will apply paradgms learned from our mouse genetic experiments to direct hESCs towards the beta cell lineage. Experiments under this Aim will directly test how changes in Fgf and Notch signaling affect the maturity of endocrine cells produced from hESCs in vitro. Preliminary evidence from the PI's laboratory suggests that endocrine cell maturity can be improved by providing a Fgf and Notch signaling environment that more closely resembles the environment during normal development. Together, these experiments will aid the identification of culture conditions that support the differentiation of functional beta cells from hESCs in vitro.